Officials have avoided any talk of budget offenders like Greece being kicked out of the euro zone but the Netherlands put the unwanted question firmly back on the table yesterday (8 September), with proposals to appoint a new “commissioner for budgetary discipline”.
Writing in the Financial Times on Thursday (8 September), Dutch Prime Minister Mark Rutte and Finance Minister Jan Kees de Jager said a new “commissioner for budgetary discipline” should have the authority to veto national budget plans which break EU debt and deficit rules.
“In the future, the ultimate sanction can be to force countries to leave the euro,” Rutte and de Jager wrote.
The European Commission strongly rejected the idea. “Neither exit or expulsion from the euro area is possible according to the Lisbon Treaty under which the part in the euro is irrevocable,” Commission spokesperson Amadeu Altafaj Tardio told journalists on Thursday.
The spokesperson attempted to quash any rumours that a euro zone exit for any budget offenders was on the cards or even being discussed. “We are still trying to agree what is on the table,” Tardio added, referring to ongoing delays in a review of the Stability and Growth Pact which outlines debt and deficit ceilings countries are obliged to adhere to.
Details of the proposal were sent to Dutch lawmakers on Wednesday (7 September) and are contained in a nine-page document entitled ‘A Vision on the Future of the Economic and Monetary Union’.
The document does not only talk about euro exit but also about stricter rules to prevent political cronyism, such as that which allowed France and Germany to circumvent the pact in 2003.
De Jager later explained that no treaty change would be necessary to appoint a commissioner for budgetary discipline. “To put someone out of the euro zone you need a treaty change. For a European commissioner that is not the case. In the current treaty there is the possibility to have a commissioner who can give penalties,” the Dutch finance minister told reporters.
Sign up for the Eurasia Review newsletter. Click here to have Eurasia Review's newsletter delivered via RSS, as an email newsletter, via mobile or on your personal news page.
The new commissioner would have the authority to put persistent rule breakers under the stewardship of the euro zone and apply a range of sanctions, including withholding EU funds and retracting their EU voting rights.
The terse subject of euro exit would only be as a last resort. “The notion of an exit is the logical ultimate consequence of a systematic failure to live up to the criteria of the euro zone. It is meant to ensure a healthy and viable euro zone for all its members,” a Dutch diplomat told EurActiv.
The Dutch plan comes on the back of increasing pressure being piled on the Greek government to agree to more public spending cuts. In a bid to patch up a row with the country’s international creditors on what kind of cuts should be made, Finance Minister Evangelos Venizelos announced a series of job cuts in the public sector yesterday.
A visit by a mission of ECB (European Central Bank), EU and IMF (International Monetary Fund) officials ended abruptly last Friday as Greece reportedly did not want to pursue an additional €1.7 billion worth of new austerity measures.